• Boomer Consulting, Inc.

Establishing KPIs That Fit Your Firm

Managing partners from across the US are constantly monitoring their firm’s performance to stay ahead of the curve. Those who lead the profession, however, are not only monitoring their performance internally but are benchmarking their performance against others to see where they measure up. This practice helps give the firm a competitive edge and allows them to grow and develop their business.

Identifying which key performance indicators are the right fit for your firm is no easy task. From measuring performance over time or against a budget to more qualitative metrics, such as how effective processes are, there is no 'one size fits all' when it comes to monitoring your firms KPIs. While determining which ones are right for your firm, you should consider your firm's mission, core values and culture. Driving a firm to work as a team toward a common goal, if not done properly or in-line with your firm’s values can breed discontent among team members and partners. Knowing this, how do you reinforce the importance of meeting the targets set?

The most successful firms have developed a system of goal-setting and benchmarking those results to ensure they are focusing on continuous improvement. These goals should be realistic, attainable and should also be in line with your firm’s values. Since it takes a team to hit targets, leadership should be reinforcing those targets, deciding where to focus efforts and providing feedback regularly to help keep the firm on track.

The following KPIs are commonly measured and benchmarked:


Staff can do the vast majority of the work performed by a CPA firm. Therefore, partners should be focused on creating work for non-partners to perform. Achieving high leverage frees up partner time to devote to practice development, nurturing client relationships, rainmaking and helping staff learn and grow.

Utilization rate and realization rate

These are highly quantitative measures, but they’re useful when tracked by service offering, as they can provide information about profitability of the firm’s service offerings.

Average Hourly Rate

Most firms have a range of billing rates based on salary and experience level. Take the number of employees in your firm (including partners and admin as well as professionals) and multiply it by the working hours in a year to get total hours worked. For example, 50 people multiplied by 1,750 hours each equals 87,500 worked hours. Now divide your total revenue by total hours worked. If this number is low, you can increase it by charging more for the same work, being more efficient, or selling higher value services. If you are focused on right pricing and continuous improvement, your average hourly rate should improve every month.

Lifetime Value of a Client

This is the sum of all revenues generated from the firm’s service offerings over the lifetime of the client. Most firms want to know this metric and how it changes from year to year for its biggest clients. It’s good to know how long these clients have been with the firm and ensure that the firm’s new services have been offered to those clients.

Client Retention Rates

Which service offerings are driving success for the firm and which are laggards? Where is the firm keeping clients? What patterns can help refine the approach to client service? Evaluating retention rates at regular intervals (i.e., 1-, 3-, 5-, and 10-years) can provide insight on how to keep clients happy.

Average Number of Services per Client

The longer you work with a client, the more you become attuned to their needs and better able you are to address their needs with a variety of services. This can increase client retention rates exponentially.

Staff to Partner Ratio

It’s crucial for partners to focus on their core competencies, but that requires having a team in place for support. The perfect ratio of staff to partners will depend on the size of your firm.

Revenue Growth per year

This should be examined by service offering, by partner, and by industry/niche. When you compare budget to actual, ideally, the actuals will be at or higher than the budgeted. If not, work on determining where you fall short and look for opportunities to better equip teams and individuals to reach those goals.

WIP Management

This is particularly important outside of tax deadlines. These times of the year often come with large write-offs because team members (and partners) are burned out. Manage WIP by looking at three core metrics: average job turnaround, weekly job completion goals at individual and firm level, and aged WIP. WIP should be reviewed at least every two weeks and clients contacted for outstanding information.

Employee Turnover rates

This isn’t a financial ratio, but a significant part of the success of your firm is dependent on a stable workforce. High turnover has a negative impact on performance because of the costs associated with hiring and retaining qualified personnel. If your turnover is high, then something is wrong and needs to be addressed.

Benchmarking surveys, such as AICPA MAPS and peer groups, such as the Boomer Managing Partner Circle™, are excellent resources for establishing your firm’s KPIs. These resources will give you the opportunity to compare statistics and identify risks to other firms of comparable size or region to show whether or not your firm, partners and staff are performing at, or above their peers. When used effectively, your KPIs should provide you with insight on establishing your firm goals while providing you the competitive edge you need to grow your business.


Samantha Zerr is the Operations Accountant for Boomer Consulting, Inc. Her primary duties include managing the financial operations, handling travel arrangements and providing administrative support to the shareholders. She also works closely with the Director of 10X Operations to maintain and improve the use of software and web base applications to ensure they line up with our SamePage initiative.